4 Undervalued Global Renewable Energy Stocks

Renewable energy in the US may be under fire, but it is thriving in global markets.

Globally, according to the IEA’s midyear update, renewables are expected to surpass coal-fired generation “either as early as 2025 or in 2026,” as coal’s share in total generation “is set to drop below 33% for the first time in the last 100 years.”

Driving the trend is solar and wind energy, which combined are expected to account for 17% of global electricity generation this year, up from 15% in 2024. That’s expected to exceed 19% in 2026.

To be sure, the current US administration’s hostility to renewable energy is affecting foreign companies operating in the US.

For example, the US Department of the Interior has blocked the development of renewable energy projects on federally owned land and offshore, disrupting the progress the US has made in previous years in renewable energy, which last year, produced over 20% of the country’s electricity. Nevertheless, cheap valuations for some stocks may warrant further study.

For the year to date, the Morningstar Global Markets Renewable Energy Index is up 18.43%, versus the 14.29% gain for the Morningstar Global Markets Index.

The Morningstar Global Markets Renewable Energy Index includes companies in the Morningstar Global Markets Index, which derive at least 5% of revenues from renewable energy or green transportation, and companies that use renewable energy for at least 25% of their energy requirements. We looked at the most undervalued stocks in the index.

ASM International

“Like its Dutch peers ASML or Besi, ASM acts as an assembler and integrator of many parts and subsystems rather than as a manufacturer. This, together with a multisourcing strategy, allows the firm to maintain high flexibility and adapt better to the semiconductor cycle. Like other wafer fab equipment firms, ASM typically develops and tests products together with its customers to help them optimize performance.

“Our fair value estimate represents a forward price/earnings ratio of 41 and 36 times for 2025 and 2026, respectively. We expect ASM’s growth will outperform the overall wafer fab equipment market in the next decade, given that the transition to gate-all-around transistors and advanced memory chips will require more ALD intensity, which is ASM’s main product line.”

—Javier Correonero, Morningstar equity analyst

AGL Energy

“AGL Energy is one of Australia’s largest integrated energy companies. Earnings are dominated by energy generation (wholesale markets), with energy retailing contributing just a fifth of operating earnings. Strategy is heavily influenced by government energy policy, such as the renewable energy target.

“We think the (fair value) outlook is now relatively stable. We forecast a five-year EBITDA compound annual growth rate of 2% as investment in new large-scale batteries and other developments offsets headwinds from cheap coal and gas supply contracts expiring.”

—Adrian Atkins, Morningstar senior equity analyst

Jinko Solar

“Jinko Solar, a global leader in the solar industry, shipped 93 gigawatts of solar modules in 2024, securing its top position worldwide. Jinko is highly self-sufficient, producing solar wafers internally to manufacture solar cells, which are then assembled into solar modules.

“We cut our fair value estimate for no-moat Jinko Solar by 12% to CNY 8. Despite this, we believe Jinko is undervalued, currently trading at a 30% discount.”

—Cheng Wang, CFA, Morningstar equity analyst

EDP Renovaveis

EDP Renovaveis is the 71%-owned subsidiary of integrated Portuguese utility EDP. It’s one of the largest renewables developers in the world. The US accounts for half of its capacity, Europe for 35%, and the rest is located in South America and the Asia-Pacific region.

“This enviable position stems from an early-mover advantage reflecting astute capital allocation, strong execution, and support from parent EDP. Capacity doubled between 2010 and 2021, driving a 20% earnings per share compound annual growth rate.

However, “with its large US footprint, the firm is exposed to tariffs and the whims of the Donald Trump administration.

“We trim our fair value estimate by 8%, to EUR 12 per share from EUR 13, after reducing our earnings forecasts on the back of the US-dollar depreciation since our last update and lower capacity addition forecasts.”

—Tancrede Fulop, CFA, Morningstar senior equity analyst